Chapter 4: Q4-16E (page 212)
Refer to Exercise 4-6 and prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system and the gross method are used by both the buyer and the seller.
Answer
Both debit and credit sides of the journal amount to$72,000 each.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Answer each of the following questions related to international accounting standards.
a. Explain how the accounting for merchandise purchases and sales is different between accounting under IFRS versus U.S. GAAP.
b. Income statements prepared under IFRS usually report an item titled finance costs. What do finance costs refer to?
c. U.S. GAAP prohibits alternative measures of income reported on the income statement. Does IFRS permit such alternative measures on the income statement?
Refer to Exercise 4-7 and prepare journal entries to record each of the merchandising transactions assuming that the perpetual inventory system and the net method are used by both the buyer and the seller.
Refer to QS 4-5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the net method and a perpetual inventory system.
Refer to QS 4-5 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.
Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.)
May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of \(10 cash per unit (for a total cost of \)20,000).
5 Allied sold 1,500 of the units in inventory for \(14 per unit (invoice total: \)21,000) to Macy Co. under credit terms 2∕10, n∕60. The goods cost Allied \(15,000.
7 Macy returns 125 units because they did not fit the customer’s needs (invoice amount: \)1,750). Allied restores the units, which cost \(1,250, to its inventory.
8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for \)300 toward the original invoice amount to compensate for the damage.
15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
